Newsweek's article on layoffs

I have recently read one of Newsweek's articles titled "Layoffs are bad for business-The Downside of Downsizing" by Jeffery Pfeffer. I felt intrigued as I believed that layoffs were good for a company facing an economic crisis and decided to read the article.

After four pages of weighing the pros and cons of downsizing (layoffs), my perspective changed. Layoffs are definitely bad for companies and businesses, especially in the face of a global economic crisis, and there is a growing amount of academic evidence that supports this view. I will now quote an example from the article:

"A study of 141 layoff announcements between 1979 and 1997 found negative stock returns to companies announcing layoffs with larger and permanent layoffs leading to greater negative effects."

In the article, directly below this sentence are two other studies also slamming the act of downsizing with real statistics and proven facts. The main point of this article is that downsizing is bad, and that companies should stop downsizing to prevent further damage to the business.

How will downsizing affect the business in any case, you ask? There are various reasons.

-Layoffs as a cost-cutting measure aren't reliable. Because of the announcement/rumour that there would be layoffs, there was lowered morale among employees, thus leading to the possibility that some of the best staff who is capable of finding other jobs may quit, and so the company may have to attract them back by means of higher pay and/or better incentives.

-Layoffs don't increase company profits or productivity. This is shown to be true here and here

-Not surprisingly, downsizing also affects the people that have been retrenched. Ever watched CSI or Mentalist? Just in case you never did, these are both shows on crime-solving and murders. There is a trend in both shows where work-related murders are shown very often. It is the same in the real world. Revenge is a strong instinct, and people who are jobless and have just been retrenched are 6 times as likely to exact vengeance unto his previous boss.

However, there really are some cases in which companies have no choice but to downsize. A few ways to minimise the impact on employee morale (as seen in the article) are allowing the retrenched to say goodbye, and having a better severance package.

Downsizing - It is an entirely bad decision, no matter what situation one's business is in. I strongly discourage anyone to do this.

Here's the link to the online version of the article: http://www.newsweek.com/id/233131/page/2

First post.

So this is my first post, the first step on a LA blogging journey, and I'd like to declare the below:

-Firstly, I am not exactly a fuzzball, it's just that I like the name.
-Secondly, this blog is (almost) purely for reaping in ACE points for Language Arts.
-Thirdly, simply because I will be representing my P.O.V, thou art free to comment and oppose (or build on) my P.O.V.
-Fourthly, spammers will not be entertained. The Tag Box is over there by the way.
-Lastly, my personal blog is here. Spammers will be entertained here.
(CAUTION: this blog is not related to LA whatsoever and is only used for personal purposes. The posts do not make sense and are meant to be whatever they are meant to be.)